Alibaba Group Holding:A promising 3Q w/robust 11.11GMV

We expect Alibaba to report strong 3QFY18 results in early Feb, supported bysuccessful Single Day sales and sustained strength in user traffic. Weforecast 57% yoy revenue growth in 3QFY18 to Rmb83.8bn, attributable tothe consolidation of Cainiao and a robust China Retail which we project togrow 51% yoy to Rmb61.4bn. We foresee margin contraction from theconsolidation of Cainiao and drag from new retail and international business.

    Our earnings forecasts remain largely unchanged. We roll-over our SOTPvaluation from FY18 to FY19, and raise our TP to US$259 from US$245.

    Sustained strength in Tmall MAU and time spent. Our mobile traffic trackershows sustained strength in Alibaba’s MAU and user time spent, albeit aslow-down in overall online retail sales growth. According to NBS data, onlineretail sales growth slowed to 23% yoy in Oct-Nov 2017 from 30% yoy in3Q17. Nonetheless, we observe acceleration in both mobile MAU and timespent on Alibaba’s Tmall & Taobao